Budget Day 2026: measures for individuals
On Budget Day 2026, the plans for the coming year were announced. We have listed the most important tax measures that are relevant to you as an individual. What changes for you?
- Adjustment box 1 income tax rate and brackets: The tax rate and income thresholds of the tax brackets in box 1 of the Dutch personal income tax (income from employment and home ownership) will be adjusted. For taxpayers below the state pension age (AOW age), the first bracket will apply to income up to € 39,247 (2026: € 38,883) and will be subject to a combined tax rate of 36.23 per cent (2026: 35.75 per cent). The second bracket will apply to income from € 39,248 to € 78,426 (2026: € 38,883 to € 78,426). The third bracket will remain applicable to income from € 78,426. The second tax bracket will thus be subject to a combined tax rate of 38.16 per cent (2026: 37.56 per cent). The combined tax rate for the third bracket (49.50 per cent) will remain unchanged.
- Limitation on income tax indexation due to the freedom contribution: The income tax brackets and tax credits of the Dutch personal income tax will be subject to limited inflation indexation in 2027 and 2028 in order to finance the freedom contribution for citizens.
- Increase in the amount of employment tax credit: The amount of the employment tax credit in the Dutch personal income tax will be increased for earned income (such as wages, business profits, or income from other activities).
- Reduction in the base amount for elderly person's tax credit: The base amount of the elderly person's tax credit for income tax purposes will be reduced to € 1,967 (2026: € 2,067). The elderly person's tax credit applies to taxpayers who have reached the Dutch state pension age (AOW age). The single elderly person's tax credit will be increased to € 547 (2026: € 540).
- Adjustment acquisition price following transfer place of effective management for foreign taxpayers (box 2): If the place of effective management of a foreign company is transferred to the Netherlands, a substantial interest holder residing outside the Netherlands may become subject to Dutch non-resident personal income tax in respect of that substantial interest. The acquisition cost of the shares will be determined based on their fair market value. As a result, only an increase or decrease in value occurring after the transfer of effective management will be subject to Dutch income tax. For situations in which the company was previously established in the Netherlands, further rules are set forth in subordinate regulations.
- Exclusion of concurrence between death dividend rule and excessive borrowing (Box 2): Upon the death of a holder of a substantial interest, heirs may, under certain conditions, distribute dividends within 24 months of the death without incurring immediate Box 2 taxation. This provision is intended to enable heirs to pay the inheritance and income taxes due without immediately incurring additional Box 2 taxation. Starting in 2027, it is proposed that this facility no longer apply to the notional Box 2 benefit arising from excessive debt owed to one’s own company (excessive borrowing). This will prevent the facility from being used in situations for which it was not originally intended and may prevent double taxation.
- No final decision on box 3: In a separate Parliamentary letter, it was indicated that there is currently insufficient political support for a new box 3 regime. As a result, the Senate has been requested to postpone its consideration of the Actual Return Box 3 Act (Wet werkelijk rendement box 3). Four possible scenarios for the future of box 3 are outlined. These range from limited improvements to the current legislative proposal to a full transition to a capital gains tax regime. The scenarios differ primarily in terms of their implementation date, feasibility, impact on taxpayers and budgetary costs.
- Increase deductible travel expenses: The maximum deductible amount of the public transport commuting allowance for personal income tax purposes will be structurally increased, with retroactive effect from 1 January 2026, from € 0.23 to € 0.25 per kilometre. The increase applies to various fixed travel expense deductions, including travel expenses qualifying as:
- Specific healthcare costs;
- The deduction for weekend expenses for people with disabilities related to travel by car;
- Travel expenses for visiting sick relatives;
- For certain types of healthcare-related transportation by car (other than by taxi), and;
- Travel expenses where volunteers waive reimbursement and claim a charitable donation deduction instead.
- This increase had already been implemented through an administrative decree, and it is now being included in legislation.
- Abolition specific healthcare costs deduction: As of 2028, the personal income tax deduction for specific healthcare costs and the corresponding compensation scheme for specific healthcare costs will be abolished in full. As a result, healthcare costs will no longer be deductible for income tax purposes.
- Reduction in real estate transfer tax for private investors: The real estate transfer tax rate for the purchase of properties that the buyer does not intend to live in themselves (such as a property for letting or a holiday home) will be reduced from 8 per cent to 7 per cent.
- Introduction refund scheme for Dutch dividends received through foreign investment funds: A new dividend withholding tax refund scheme will be introduced for Dutch investors who receive dividends from Dutch resident companies through foreign investment funds. Under this scheme, Dutch investors may, subject to certain conditions, reclaim Dutch dividend withholding tax that was levied at the level of the foreign investment fund. The objective is to ensure that a Dutch investor holding Dutch shares through a foreign investment fund is not economically taxed more heavily than an investor holding those shares through a Dutch fiscal investment institution.
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